HP Unveils Targeted Program to Streamline Company

HostReview.com
Thursday, July 21, 2005; 04:26 PM

HP today unveiled a targeted program designed to simplify its structure, reduce costs and place greater focus on its customers. The company expects these actions to save $1.9 billion annually, drive growth and increase business performance.

The program simplifies HP's structure by embedding sales and marketing efforts directly into the business units, providing a tighter link with customers. It cuts expenditures by restructuring support functions, eliminating redundancies and modifying HP's U.S. retirement programs, which will free funds for reinvestment in the business. Additionally, it improves individual accountability and executive focus through a simpler reporting structure with fewer management layers.

"After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential," said Mark Hurd, HP chief executive officer and president. "We can perform better - for our customers and partners, our employees and our shareholders - and we will."

To improve costs, the company plans to reduce its workforce over the next six quarters by 14,500 employees, or about 10 percent of its regular full-time staff, and modify its U.S. retirement benefits programs.

Beginning in fiscal 2007, HP expects approximate ongoing annual savings of $1.9 billion, composed of $1.6 billion in labor costs and $300 million in benefits savings. In fiscal 2006, HP expects savings of between $900 million and $1.05 billion.